Douglas Olsen
Taking on student loans is a significant burden, especially for counselors and mental health therapists, who often earn five-figure incomes. Thankfully, there are multiple programs offering student loan forgiveness for counselors, including federal programs such as the Public Service Loan Forgiveness (PSLF) program and the Perkins Loan cancellation program. Additionally, certain states like New York and California offer loan forgiveness for mental health professionals working in critical-need areas. Furthermore, the National Health Service Corps (NHSC) Loan Repayment Program provides opportunities for loan repayment through service in Health Professional Shortage Areas (HPSAs). To find the right loan forgiveness plan, it is essential to consider factors such as the type of loan and the location of therapy services.
| Characteristics | Values |
|---|---|
| Loan Forgiveness Programs | Public Service Loan Forgiveness (PSLF), IDR, Perkins Loan cancellation and discharge program, NHSC Loan Repayment Program, state-specific programs |
| Requirements | Federal loans, Direct federal loans, service in a Health Professional Shortage Area (HPSA), service in a high-need area, employment in a public organization, working in research for a qualified organization |
| Amounts | Up to $50,000, up to $6,500 (New York state), varying amounts (California) |
| Other | Consult a student loan specialist or financial advisor |
Explore related products
What You'll Learn
Public Service Loan Forgiveness (PSLF)
Only Direct federal loans can be forgiven under PSLF. Perkins Loans, for example, require a few extra steps to be considered for PSLF forgiveness. However, Perkins Loans can be forgiven through a different program. The federal government has a Perkins Loan cancellation and discharge program that offers up to 100% forgiveness of these student loans, but specific eligibility requirements apply. Private student loans do not qualify for federal benefits.
For therapists who don’t qualify for PSLF, income-driven repayment (IDR) is an option. With these plans, the loan servicer calculates payments based on family size and income, rather than the loan amount. After 20–25 years of income-based payments, the remaining balance of the student loans will be forgiven. After the balance is paid off, taxes must be paid on the forgiven amount.
The PSLF program has experienced challenges, including a significant backlog of applications. As of July 31, there was a 72,730-person backlog of borrowers awaiting application processing by the Department of Education.
Student Loans: Credit Card Debt Solution?
You may want to see also
Explore related products
IDR plans for therapists
For therapists who don't qualify for Public Service Loan Forgiveness (PSLF), income-driven repayment (IDR) is an option. IDR plans include:
Income-Based Repayment (IBR) Plan
Pay 10% to 15% of your discretionary income for loan terms of 20 to 25 years (depending on when you took out your loans).
Income-Contingent Repayment (ICR) Plan
Pay 20% of your discretionary income or what a fixed payment would be for 12 years, based on your income for 25 years.
Pay As You Earn (PAYE)
Pay 10% of your discretionary income for 20 years.
Saving on a Valuable Education (SAVE)
Formerly known as REPAYE, you pay 5% to 10% of your discretionary income, depending on the type of loan—if your loans were for an undergraduate or graduate program.
With these plans, your loan servicer will calculate your payments based on your family size and income (usually around 10-20 percent, but the amount depends on the plan you're on), rather than your loan amount. After 20–25 years (depending on the plan) of income-based payments, the remaining balance of your student loans will be forgiven. After the balance is paid off, you’ll pay taxes on the forgiven amount.
Before enrolling in an IDR program, it’s worth looking into local and state options that may kick in faster or don't include a large tax payment. For example, in New York state, licensed social workers providing mental health services can qualify for $6,500 in public or private student loan forgiveness for four years of qualified service, and possibly more if you work in a critical-need area. In California, mental and behavioral health professionals who work in areas with clinician shortages at approved practice sites could qualify for awards toward loan repayment. Amounts vary, and repayment is contingent on two-year full-time or four-year half-time service.
To find out about potential options in your state, search “therapist loan forgiveness in [state]” or “mental health professional loan forgiveness in [state]”.
Tuition Fees: Non-Degree Students' Payment Obligations Explained
You may want to see also
Explore related products
State-specific loan forgiveness
New York State offers licensed social workers providing mental health services up to $6,500 in public or private student loan forgiveness for four years of qualified service. Working in a critical-need area may even qualify you for more loan forgiveness.
California has a similar program for mental and behavioral health professionals who work in areas with clinician shortages at approved practice sites. The award amounts for loan repayment in California vary, but it typically requires a two-year full-time or four-year half-time service commitment.
The National Health Service Corps (NHSC) Loan Repayment Program is another option for mental and behavioral health providers working in qualifying disciplines. This program offers up to \$75,000 for primary care providers and \$50,000 for all other providers, including mental/behavioral health care professionals, for a two-year initial term of full-time service. After completing the initial two-year service contract, participants may apply for additional loan repayment funds through one-year continuation service contracts.
It is worth noting that the NHSC program is not limited to a specific state but is designed for health professionals serving in Health Professional Shortage Areas (HPSAs). Therefore, counselors and mental health professionals in various states may benefit from this program as long as they serve in designated HPSAs.
To explore state-specific loan forgiveness programs in your area, consider searching online for "therapist loan forgiveness in [state]" or "mental health professional loan forgiveness in [state]." Additionally, speaking with a student loan specialist or financial advisor can help you navigate the various options and find the best plan for your specific situation.
Paying Off Student Loans? Focus on the Principal
You may want to see also
Explore related products
$9.59 $16.99
NHSC Loan Repayment Program
The National Health Service Corps (NHSC) Loan Repayment Program offers eligible students in their final year of medical, physician assistant, nursing, or dental school loan repayment assistance. In return, participants must provide at least three years of full-time service at an NHSC-approved site in a designated Health Professional Shortage Area (HPSA).
The program provides funds to repay outstanding, qualifying school loans, which are exempt from federal income and employment taxes. The amount awarded depends on the type of care provided and the level of need at the workplace. For instance, for the 2025 NHSC loan repayment program, primary care participants (including physicians, nurse practitioners, certified nurse midwives, and physician assistants serving in a primary care HPSA) can receive up to $80,000 for full-time participants and up to $42,500 for half-time participants. Meanwhile, non-primary care participants (including physicians, nurse practitioners, certified nurse midwives, and physician assistants specializing in behavioral health serving in a mental HPSA, as well as dentists, dental hygienists, and behavioral health providers) can receive up to $55,000 for full-time participants and up to $30,000 for half-time participants.
Additionally, participants can apply for an NHSC Loan Repayment Program Continuation Contract after their initial two-year service contract to receive additional loan repayment funds for any remaining school loans through one-year continuation service contracts. However, there is no guarantee that a continuation contract will be offered.
To be eligible for the NHSC Loan Repayment Program, applicants must be United States citizens or nationals, providers or eligible to participate in the Medicare, Medicaid, and the State Children's Health Insurance Program, and fully trained and licensed to practice in the NHSC-eligible discipline and state in which they are applying to serve. Applicants must also provide information on each qualifying school loan and may need to submit additional supporting documents, such as proof of citizenship and specialty certification.
Student Loan Payment Strategies: Private Loans
You may want to see also
Explore related products
National Institutes of Health (NIH) loan repayment
The National Institutes of Health (NIH) Loan Repayment Programs (LRPs) are a set of programs established by Congress to recruit and retain highly qualified health professionals in biomedical or biobehavioural research careers. The program repays up to $50,000 per year of qualified educational debt for scientists engaging in research relevant to the NIH mission.
The escalating costs of advanced education and training in medicine and clinical specialties are forcing some scientists to move from careers in research to higher-paying private industry or practice careers. The LRPs counteract this financial pressure by offering to repay educational debt in return for a commitment to engage in NIH mission-relevant research.
To be eligible for the NIH Loan Repayment Program, applicants must:
- Be U.S. citizens, U.S. nationals, or permanent residents of the United States.
- Possess an M.D., Ph.D., Pharm.D., Psy.D., D.O., D.D.S., D.M.D., D.P.M., D.C., N.D., O.D., D.V.M., or an equivalent doctoral-level degree from an accredited institution.
- Conduct research that is not prohibited by federal law, regulations, or policies of the U.S. Department of Health and Human Services or NIH.
- Conduct their research in accordance with applicable federal, state, and local laws, such as applicable human subject protection regulations, for the entire award period.
- Engage in qualified research for an average of at least 20 hours per week during each quarterly service period of the program award.
The NIH Loan Repayment Programs include the Pediatric Research Program, which aims to recruit and retain highly qualified health professionals in pediatric research. Pediatric research is defined by the NIH as research directly related to diseases, disorders, and other conditions in children, and it does not need to involve human subjects.
Additionally, for psychologists with Ph.D. or Psy.D. degrees engaged in research projects for qualified organizations, the NIH could repay up to $50,000 in student loans each year. Qualifying research does not have to be NIH-funded, but it must align with the NIH's mission, and psychologists need to commit to at least two years of research.
Student Loan Payoff: Your Guide to Financial Freedom
You may want to see also
Frequently asked questions
The Public Service Loan Forgiveness (PSLF) program provides complete student loan forgiveness on the remaining student loan balance after 10 years of service. Only Direct federal loans can be forgiven under PSLF.
For therapists who don’t qualify for PSLF, income-driven repayment (IDR) is an option. IDR plans calculate payments based on family size and income rather than loan amounts. After 20 to 25 years of income-based payments, the remaining balance of the student loans will be forgiven. Another alternative is the NHSC Loan Repayment Program, which offers loan repayment funds to pay off any remaining school loans through one-year continuation service contracts.
In New York state, licensed social workers providing mental health services can qualify for $6,500 in public or private student loan forgiveness for four years of qualified service. In California, mental and behavioral health professionals who work in areas with clinician shortages at approved practice sites could qualify for awards toward loan repayment.
For psychologists with Ph.D. or Psy.D. degrees engaged in research projects for qualified organizations, the National Institutes of Health (NIH) could repay up to $50,000 in student loans each year. To qualify, the research must align with the NIH’s mission, and psychologists need to commit to at least two years of research.
Some counseling jobs that help with student loan forgiveness include financial aid counseling, financial aid specialist, and financial access counselor. These roles involve helping students determine their financial aid needs, explaining their rights and responsibilities, and providing guidance on financial aid programs.
